Where Is EBay Stock Headed?

This post was originally published on this site

eBay’s stock (NASDAQ: EBAY) has lost roughly 31% YTD as compared to the 17% drop in the S&P500 index over the same period. However, at its current price of $46, the stock is trading 25% below its fair value of $61 – Trefis’ estimate for eBay’s valuation.

The company operates an online marketplace “eBay EBAY .com,” where third-party buyers and sellers can transact in a variety of products. While it surpassed the consensus estimates in the first quarter of 2022, the net revenues of $2.5 billion were still 6% lower than the year-ago figure. This was mainly due to the easing of Covid-19-related restrictions, and the re-opening of retail stores, leading to a decline in online sales on a year-on-year basis. Notably, eBay’s gross merchandise value decreased 20% y-o-y in Q1. Further, the company presented a lower-than-expected growth outlook for the second quarter, which failed to impress the investors. This has made investors somewhat cautious about the stock, resulting in a 15% decline since the Q1 results.

Online sales numbers have normalized in 2022. Further, the tough macroeconomic outlook due to high inflation figures, aggressive interest rate hikes, and the Russia-Ukraine crisis is likely to hurt the consumer discretionary spending levels. Overall, we expect the net sales to see a year-on-year decrease in the second quarter. Notably, consensus estimates for Q2 revenues and earnings are around $2.37 billion and $0.89 respectively.

The firm posted strong results in 2021, with net sales increasing by 17% y-o-y to $10.4 billion. Moving forward, we expect the revenues to remain under pressure for the subsequent quarters. Altogether, eBay’s revenues are estimated to touch $10.2 billion in FY2022. Further, its net income from continuing operations is likely to remain around $2.3 billion. This coupled with an annual EPS of $3.77 and a P/E multiple of just above 16x will lead to the valuation of $61.

Here you’ll find our previous coverage of eBay stock, where you can track our view over time.

MORE FOR YOU

With inflation rising and the Fed raising interest rates, eBay has fallen 31% this year. Can it drop more? See how low can eBay stock go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Invest with Trefis Market Beating Portfolios

See all Trefis Price Estimates